fundamental alert

Forex Market Update: British Pound Continues to Slide Amid the Less-Than-Expected Rise in Jobless Claims

Wednesday, 17 June 2009 09:30:03 GMT  |  DailyFX Research

U.K. May unemployment data was not as bad as expected. Claimant count rose by 39.3k and the claimant count rate rose to 4.8%, this was above our survey median for 65k and compares to 49.6k (revised form 57.1k) and 4.6% (revised from 4.7%) in April. Meanwhile, the 3m average ILO rate rose to 7.2% (median 7.3%) in April, versus 7.1% in March. The rising spare capacity in the labor market is placing downward pressure on wage growth but the 3m y/y April average earnings rate still rose 0.8% (median 0.1%), compared to -0.3% in March (revised from -0.4%). Excluding bonuses, earnings rose 2.7% 3m y/y (median 2.8%), down from 3.0% the previous month. Slow wage growth is hence likely to add downward pressure to inflation throughout the year.

 

Cable turned lower after good offers capped the post-data rally from 1.6430. The reversal was swift after a U.S. name forced Cable down to 1.6305 lows before any buyers of note returned to the market. European accounts are reportedly buying ahead of 1.6300, where good size stop losses are tipped. The source of the sell-off has perplexed intra-day accounts; although there was disappointment that the BoE did not place too much emphasis on the recent improvement in data. The market is torn between the recent improvements in economic conditions, but the high level of debt remains a potentially negative influence.

 

 

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